When should a B2B marketplace create embedded finance products, and what customer value do they offer?

It comes down to just the ability of traditional financiers to underwrite and provide financing options. Whether those financing options make sense for the marketplace, they're serving or the businesses and the sector they're servicing. So to the extent that you have a unique insight or an underwriting advantage relative to other players in the market, that's where it makes sense. That's where it's crucial to aggregate data to effectively find alpha in that and use that to your advantage to create better financial products that suit your needs.

It's also just a general understanding of the customer segment. Like someone trying to build a financial product that serves everybody versus one targeting a specific vertical, the specialists will probably win because they understand the nuances of that transaction.

Marketplace operators have unique insights into the liquidity challenges and opportunities. It’s easier for them to provide data that can be used to underwrite specific transactions. They are uniquely positioned to take on more perceived risk than a traditional financier who may not have the same visibility or understanding.

As a general rule of thumb, the more homogenous the product, the easier it is to find a financing provider and provide competitive terms. But the more bespoke or customized the product is, or frankly even just how new it is to traditional financiers, it's harder to underwrite against that. So that's another way of saying that if there's some way to look at history or a pattern or something well understood, it's easier to finance. Then if you think about the vendors in general, if you're dealing with an SMB marketplace that just doesn't have a ton of balance sheet strength, it's harder for them given their working capital position.